Jasmine's stock is selling for RM15 per share. Jasmine does not intend to pay any dividend. However, it will pay a dividend of RM2.00 at the end of year 3. After that, dividends are expected to grow at the firm's normal growth rate of 6%. If the firm's required rate of return is 18%, should you purchase the stock? Why?

 

The accountant of COAT Bhd provides you with the following information

PPG Corp                KP Corp

           Current ROE                          12%                            8%

           Current EPS                           RM5                           RM1.50

           Current DPS                          RM1.80                      RM0.50

           Current Market Price             RM22                         RM7

 

 You are required to:

 

 a) Compute the dividend payout ratio of PPG and KP.

 b) Compute the intrinsic value of each stock. (assume the r = 14%) 

 c) Choose the stock you will invest and give reasons.

 

A.  An 8% bond with par value of RM1,000 has 12 years to maturity and is currently traded at RM850. Calculate the bond's yield to maturity.

                                                                                                  

B. A RM1,000 face value bond with maturity period of 15 years pays 8% coupon rate. This bond was issued 5 years ago. Current interest rate in the market is 10%

 

 i. What is the present value of the bond if the coupon rate is paid semiannually?

 

ii.If you expect the above bond to be called in FIVE (5) year time, calculate the present value of the bond. Assume coupon rate is paid annually. If the market price is RM1090, would you buy the bond? Why?